Apple: To Panic or Not to Panic

That is the question my colleague Arik poses for Apple shareholders. He says no, and implies the gloomy mood on Wall Street is overdone. I say it depends on your time horizon. If you’re a short-term trader, times could well get a lot tougher before they get easier. But if you’re a long-term investor—of the sort that most companies much prefer over the day-trading set—you’re in good hands. Despite the stock’s swoon, Jobs is focused on doing the things to make sure Apple maintains its competitive advantages over the long haul.

Why am I bearish on the short-term? Because for the first time in years, there’s no red-hot product to power the company past Wall Street’s expectations. I’m not suggesting Apple will stop growing, but at the moment there’s no magic lever to pull to exploit feverish demand for some new product. Unless Apple gets a major boost from the SDK or whatever second generation iPhone it has in the works, it doesn’t seem as though the iPhone is going to blow away any analysts’ projections. I’m sorry, no matter how cool it is, a $400 phone during a recession is a hard sell. Yes, the Mac product line is in great shape and getting stronger. But Apple is more dependent on sales in the struggling US economy than some rivals, and is a bit player in faster-growing Asian markets such as China. While Apple should continue to gain share globally, these geographic realities will temper Mac sales growth. As for the iPod, I agree the decline in sales growth was inevitable. But it just so happens the comedown has arrived in the middle of the biggest downturn in consumer spending in more than a decade. That’s not good.

What’s more, I don’t see Jobs coming to the rescue of momentum investors with any palliative measures to goose the stock—like issuing a mega-dividend to hand out some of that $18 billion in cash. In a very real sense, Apple is Steve Jobs’ company. And unlike most CEOs—mostly hired guns brought on primarily to serve shareholders—Jobs is motivated primarily by making products. I’ve interviewed him many times, and any question about the stock price usually ends up with some version of “if we make great products, the stock price will take care of itself.” For other executives, I’d say it’s a trite cliché. For Jobs, it’s his guiding principle.

So what could he possibly need with $18 billion in cash? An economist would doubtless say its a misuse of funds. But my hunch is that Jobs figures he's doing just fine by investors, and believes the dough is more valuable in his hands than elsewhere--just in case he needs it someday to make a big acquisition or to corner the market on some new hard-to-get component. As I reported last year, at one point Jobs thought about whether to bid for the 700 megahertz wireless spectrum being aucitoned off. He quickly dismissed the idea--but he'd have had the cash on hand to get in the game had he wanted to.

If Apple's refusal to part with that cash may frustrate investors, Jobs' long-term perspective will likley pay off in the end. For one, it means he’s unlikely to do any of the dumb things CEOs do when times get tough. How many tech companies have started, or got sucked into, a price war in order to maintain their market share or to try to meet analysts’ revenue numbers? How many have stuffed channels to make it appear sales were fine, forcing them to have to slash prices or take big big write-offs to deal with unsold stocks (I think it’s clear now that most of those “missing iPhones” are actually now being used in unlocked mode, rather than gathering dust on shelves somewhere)? These knee-jerk reactions usually only lead to lower margins, which means less ability to fund R&D, greater likelihood of morale-sapping layoffs, and lots of other momentum-stifling downers.

My conclusion, if you haven't guessed, is that Jobs would sacrifice sales growth to maintain his product margins—because profits is what lets Apple pay for its R&D initiatives, its well-paid product designers, and the top-shelf materials uses in its products. He’d much rather frustrate Wall Street for a time, but come out of the recession with his hit-making factory still in top working order.

But what about the recent price cut on the iPod shuffle, one might ask? I admit that when I first saw that low $49 price, I was concerned that Apple was digging into margins to try to prime the sales pump. Turns out it’s probably not the case. David Carey, president of design consulting firm Portelligent, notes that Apple had held its previous price for months, despite plummeting prices for flash memory, which have dropped from $10 a gig a year ago to $3.70 or less today. Given that flash is a major portion of the bill of materials for an iPod shuffle, Carey thinks Apple can easily maintain its historical gross margin on the product at $49. And the 2-gig shuffle will be far more profitable, given that Apple is charging $20 more for a product that has just $3.70 more worth of extra memory.

http://www.businessweek.com/technology/ByteOfTheApple/blog/archives/2008/02/to_panic_or_not.html

Microsoft chops Vista retail prices

In what may be an unprecedented decision, Microsoft said Thursday that it plans to lower the retail prices for several flavors of Windows Vista.

For those in the U.S., Microsoft is cutting prices only on the higher-end versions of Vista, and only for the upgrade version used to move from XP or another copy of Vista. The suggested price for Vista Ultimate drops to $219 from $299, while Home Premium falls to $129, from $159.

Other developed markets will also see price cuts, while in emerging markets, Microsoft is eliminating the distinction between full and upgrade versions of Home Basic and Home Premium as it attempts to convince more users there to use genuine software.

Analysts were surprised by Microsoft's move.

"I can't remember a big price cut like this," said analyst Chris Swenson, who tracks retail software sales for NPD Group. "It's very unheard of."

Microsoft finalized Windows Vista in late 2006, but held back its retail launch of the product until January 2007. It has sold more than 100 million copies, largely on the back of a strong overall PC market, but retail sales have significantly trailed those of XP in its early days and Vista has received a number of critical reviews.

In an interview, newly minted Windows consumer marketing vice president Brad Brooks said that Microsoft had been testing lower prices over the past few months and was surprised to find that the amount of revenue lost was more than made up for by an increase in the number of PC buyers willing to shell out for an upgrade.

Brooks said that Microsoft had done a lot of research prior to Vista's launch, but noted that both Home Premium and Ultimate were new products for the company. "We probably got the pricing mix wrong," he said. "You don't always get it right, but you make the adjustment."

And, a retail price cut could actually hurt Microsoft when it comes to the market for new PCs and among businesses trying to decide when, or whether, to move to Vista.

http://www.news.com/8301-13860_3-9882510-56.html

Who needs lawyers? Two more Chinese dissidents sue Yahoo

Yahoo won't be yodeling from the mountaintops after being served with yet another lawsuit this week that focuses on the company's actions in China. Chinese dissidents Zheng Cunzhu and Guo Quan filed suit against Yahoo in a California federal court, but two things set the new lawsuit apart from previous dissident lawsuits against Yahoo: the plaintiffs are representing themselves, and neither has actually been arrested.

The lawsuit is filed under the Alien Court Statute and the Torture Victim Protection Act, two laws that allow foreigners to file suits in US courts. Most of the complaint focuses on Yahoo's willingness to turn e-mail and personal information over to the Chinese authorities and its decision in 2002 to voluntarily sign the "Public Pledge on Self-Discipline for the Chinese Internet Industry" (the name alone should probably have given Yahoo pause). It also contains the usual accusations that the company's conduct has led to "battery, false imprisonment, assault, intentional infliction of emotional distress, negligence" and more.

But that's not actually what happened to the plaintiffs. Zheng Cunzhu describes himself as a student leader during democratic movements back in 1989 and a member of the "China Democracy Party." A businessman, Zheng worked in China up until 2005 and invested in "two factories and one trading company in Anhui province." He moved to the US in January, 2006, and a month later learned to the Chinese dissident Li Zhi had been arrested after Yahoo turned over information to the Chinese government.

Zheng had also used a Yahoo e-mail account to join the same political party that Li had. The news made him scared to return to China as he feared that he might meet a similar fate, so he remained in the US and lost "the real control of the two factories and his investment and property were under danger of being defrauded by others."

Guo Quan was an associate professor at Nanjing Normal University, but he lost his job there after publishing a series of letters calling on Chinese leaders to allow multiparty democracy. His complaint about Yahoo doesn't concern the company's e-mail system at all; instead, Guo asserts that his personal name and the name of his garment company (which features his personal name) have both been blocked by yahoo.com.cn. When he tries to search his own name, the system tells him, "The keyword you typed may involve in [sic] illegal contents."

Yahoo no doubt wants the mess in China to simply go away, but every few months a similar story seems to find its way into the media. Suing the company in US courts appears to be the newest strategy, and the new lawsuit is only one of several. The issue of cooperating with the Chinese government has also exposed the company to Congressional hearings, and it didn't help that Yahoo failed to mention certain information to the committee when it first appeared.

"Yahoo claims that this is just one big misunderstanding," said Rep. Tom Lantos (D-CA) last year (Lantos died a few weeks ago). "Let me be clear—this was no misunderstanding. This was inexcusably negligent behavior at best, and deliberately deceptive behavior at

http://arstechnica.com/news.ars/post/20080229-who-needs-lawyers-
two-chinese-dissidents-sue-yahoo.html

Google Goes After Another Microsoft Cash Cow

The Internet search giant on Wednesday is rolling out a rival to Microsoft’s SharePoint, a program used for collaboration among teams of workers. Google’s program, called Google Sites, will become part of the company’s applications suite, which includes e-mail, calendar, word processing, spreadsheet and presentation software. Like other elements of Google Apps, it will be free and require no installation, maintenance or upgrades.

With Google Sites, the company is taking on what Christopher Liddell, Microsoft’s chief financial officer, said has become a $1 billion a year product. That’s a relatively small, but far from insignificant, portion of Microsoft’s business division whose mainstay Office suite is the No. 1 target of Google Apps. Microsoft’s business division brought in $4.8 billion in the most recent quarter.

Google Sites was built on top of technology created by JotSpot, a startup co-founded by Joe Kraus, who also co-founded Excite, the now defunct Internet 1.0 portal. Google acquired JotSpot, which had developed a set of “wiki,” or collaboration, tools in October of 2006.

The Google Sites software allows groups of users to easily create Web documents that include text, images, videos, spreadsheets and other types of documents. Initially, it will be aimed at business users and is being housed in Google’s enterprise group. “It’s our biggest launch since Apps itself launched,” said David Girouard, vice president and general manager of the enterprise group.

Still, pitching Google Sites to businesses may prove a challenge, at least initially. “There is a lot that Google still has to prove in terms of being a viable enterprise vendor,” said Rob Koplowitz, an analyst with Forrester Research. Many businesses remain leery of putting their applications and data on servers they don’t control, for example. Mr. Koplowitz also noted that while Google Sites will include many of the popular content creation and management tools available in SharePoint, it will not have some of the more complex features that allow a large business to manage information across their entire organization. “They are targeting a subset of the SharePoint functionality,” he said.

Then again, Google Sites will be free.

http://bits.blogs.nytimes.com/2008/02/27/google-goes-after-another-microsoft-cash-cow/

Will Publishers Lose Their Bacon if Ads Are Traded Like Pork Bellies?

Aside from the Microsoft bid for Yahoo, the biggest topic of conversation at the Interactive Advertising Bureau’s convention this week was pork bellies.

The seemingly odd topic sprang from comments by the group’s incoming chairman Wenda Harris Millard, in her opening talk that: “We must not trade our advertising inventory like pork bellies.”

Half the audience felt this was the rallying cry for the battle to save the creative art of advertising from being devoured by soulless math drones. And the other half saw it as the last gasp from a species ill-suited to survive in the current environment where results can actually be measured.

In particular, Ms. Millard’s pork-belly analogy was a reference to the rise of advertising “exchanges,” modeled after financial markets, that match buyers and sellers of online advertising space. Yahoo and Microsoft have bought exchanges and Google hopes to do so as well as part of its purchase of Doubleclick.

But Ms. Millard, the president of media for Martha Stewart Omnimedia and the former head of ad sales at Yahoo, was reacting to several other automated ad placement approaches. There is the explosion of advertising networks that simply buy unsold space cheaply from many sites and resell it to marketers who want to reach the most people for the lowest cost. And there are behavioral targeting systems based on the idea that it matters who sees your ad, not where it is placed. These systems assemble data about users that follows them around the Web showing ads for products that a computer model predicts they may want to buy.

Ms. Millard argues passionately that the context of how an ad is set amid a broader environment is crucial to its effectiveness. Speaking to me later at the conference, Ms. Millard asked why Playboy never attracted major national brand advertisers like General Motors. Its audience had very attractive demographics for anyone who wanted to reach men. But it wasn’t the environment that many marketers wanted to appear, she said.

The debate became most passionate in a panel discussion Tuesday about advertising exchanges. Jim Spanfeller, the chief executive of Forbes.com, argued that his company’s limited experiments with exchanges had been “underwhelming.”

“The pricing had dramatically underperformed the initial expectations,” he said.

Bill Wise, general manager of Yahoo’s Right Media exchange, said publishers were not being thoughtful about how they used exchanges and ad networks.

“When the last sales person sells the last bit of space, they send the rest to the network,” he said. The publishers would do better, he argued, if they sold most of their inventory through automated systems and kept only a small amount of their very best ad positions to sell to clients as part of custom packages, they would make more money. The scarce supply of attractive space would raise prices, he claimed.

http://bits.blogs.nytimes.com/2008/02/27/will-publishers-lose-their-bacon-
if-ads-are-traded-like-pork-bellies/

EU slaps Microsoft with $1.35 billion fine (Job #1: Get Redmond to cough it up!)

European Union regulators on Wednesday fined Microsoft a record 899 million euros, or $1.35 billion, for failing to comply with sanctions. The fine specifically addresses sanctions over the pricing structure Microsoft had set for licensing of its interoperability protocols and patents.

The pricing issue is the last of three parts of the European Commission's historic March 2004 antitrust order, which called for the software giant to provide complete and accurate interoperability information to rivals so their software could work with the Windows operating system, as well as to license the information "under reasonable and nondiscriminatory" terms.

"We always knew the possibility of a fine (over the licensing fee structure) was...there, but no one knew when it would come or how big it would be," said a source familiar with Microsoft's thinking. "Now the other boot has dropped."

In July 2006, the Commission fined Microsoft 280.5 million euros, or $424 million, for failing to comply with the other two parts of its sanctions related to providing complete and accurate interoperability protocol information to rivals. The original decision from 2004 was upheld by the European Court of First Instance last fall.

In addition to the two fines for failure to comply, Microsoft was originally hit with a 497 million euro levy by the Commission for having abused its dominant market position at the time of that order. (The 497 million euros originally was worth $613 million. Today it converts to $752 million.)

The newest fine, announced Wednesday, is the largest ever imposed by the EU upon a single company. In total, the European regulators have fined Microsoft roughly $2.5 billion in the long-running antitrust dispute.

"Microsoft was the first company in 50 years of EU competition policy that the Commission has had to fine for failure to comply with an antitrust decision. I hope that today's decision closes a dark chapter in Microsoft's record of noncompliance with the Commission's March 2004 decision," EU Competition Commissioner Neelie Kroes said in a statement.

The ruling comes just one week after Microsoft announced a broad interoperability strategy, which included a pledge to not sue open-source developers.

"As we demonstrated last week with our new interoperability principles and specific actions to increase the openness of our products, we are focusing on steps that will improve things for the future," Microsoft said in a statement.

Although Microsoft's announcement and the Commission's fine come within days of each other, one source said the two were not related. Microsoft's announcement last week addressed how the software maker would apply the Court of First Instance's ruling to the rest of its business, according to the source.

In its new order, the Commission specifically said that Microsoft had charged "unreasonable prices for access to interface documentation for work group servers."

http://www.news.com/8301-10784_3-9880256-7.html?tag=nefd.lede

Apple: It's business, it's business time

Jobs is finally getting ready for the iPhone to mean business.

In its first eight months, the iPhone has been mostly a consumer phenomenon in the U.S. Apple has pitched the device by showing off its iPod capabilities, or how to search the Web for restaurant reservations and car prices, or update your status on Facebook. But next week Apple plans to show off some "exciting new enterprise" features for the iPhone, which will presumably make it easier for those of us who can't push the CIO around to use our iPhones as tools for work.

The groundwork for this movement has been taking place for some time. When Apple CEO Steve Jobs announced plans to bring out a software development kit for the iPhone in October, that paved the way for companies developing enterprise software applications--decidedly not Apple's strength--to move those applications to the OS X operating system that runs the iPhone. Also, earlier this year AT&T began allowing iPhone users to sign up for business accounts, after requiring them to use personal accounts in the early days of its service.

It's not hard to imagine that a wide variety of previously skeptical iPhone customers would take a second look at the product if they realized they could use it for both work and play. The first people who widely adopted smartphones were business executives, who wanted products like Research in Motion's BlackBerry so they could have access to corporate e-mail while traveling. Phones based on Microsoft's Windows Mobile, with its ties to the Exchange e-mail software, the Office suites, and the Windows desktop, were also able to exploit the business community's need for a mobile office.

Apple's first attempt at a smartphone came from a totally different place. The company swung for the fences, and connected, with its focus on consumer-friendly features like the touch-screen user interface and videos. People who had never even considered a smartphone were drawn to the iPhone, and they made the iPhone the third-best selling smartphone in the world during the fourth quarter, only the second full quarter it was available.

So now, after demonstrating that people like their iPhones, Apple has a chance to show how practical a device it can be as well. The release of a few influential enterprise applications could provide a reason for holdouts to take the iPhone plunge, or a reason for current iPhone users to upgrade once the 3G iPhone arrives.

Most notably, the iPhone currently doesn't fully support widely used e-mail software such as Microsoft's Exchange or IBM's Lotus Notes, making it much more difficult to get the IT department to support push e-mail to your iPhone the way they would a BlackBerry or a Treo. The iPhone can work with Exchange servers with some configuration changes, but that's not something that is widely supported inside IT departments that aren't located at One Infinite Loop, Cupertino, Calif.

http://www.news.com/8301-13579_3-9881165-37.html

Why is Microsoft dancing with Danger?

Why ask why?

Analysis The world may have missed it in the fuss over the Yahoo! bid, but last week Microsoft announced it had agreed to acquire Danger Inc, for a reported $500m. The purchase is indicative of Microsoft's aspirations as a provider of back-end services to the mobile industry, and could point to a new model for the future of Windows Mobile.

Since the ridiculed first few versions, Windows Mobile has shaped up to be a reasonable operating system. Massive support for developers has led to a healthy market in third-party software, and the platform is starting to make inroads into the mid-range handsets so appealing to the smartphone crowd.

But then came the iPhone, and Microsoft found itself dropping into third place in the USA, behind RIM and Apple. According to analysis from Canalys their worldwide share of the smartphone market during 2007 was 12 per cent, putting them in second place, but Apple managed a respectable seven per cent despite only being launched in a few markets (though both pale beside Symbian's 65 per cent).

Even more important is the way in which Apple goes beyond selling people handsets; it maintains an exclusive relationship (through iTunes) via which it sells products and services, while further locking the customer into the brand. Even Nokia can see the value in that, and is trying to do the same through its Ovi portal - though it can't get exclusivity without pissing off the network operators who still pay for most of the Nokia handsets.

Microsoft would like to be in that market too, providing after-sales services including software and media content, as well as optimised services and device management. The new Windows Live Mobile Developers Program demonstrates how Microsoft sees itself moving away from the client and into the background, while recent handsets from Sony Ericsson demonstrate Microsoft's acceptance that the Windows Mobile UI is preventing many people buying Windows Mobile.

According to the Opinion Research Corporation (pdf) over a fifth of smartphones bought in the USA (excluding the iPhone and BlackBerry) are returned, with the most common complaint being the customer's inability to use the thing.

Some have suggested that Microsoft's purchase of Danger indicates the imminent launch of a Zune phone, but that seems unlikely when the Zune service is more likely to migrate to a PlayReady platform, and thus become available on a range of devices including those from Microsoft.

Danger Inc is best known for the SideKick range of devices, the most recent of which is designed and manufactured by Motorola. These devices feature an interface many find intuitive, as well as some innovative hardware designs. But Danger also maintains a relationship with its customers - all mail and messaging is routed through centralised servers. Even web browsing is done through Danger's proxies which optimise the content to suit the device - not to mention having the potential to control which sites the user is allowed to visit.

Part of the purchase of Danger is no doubt to bolster Microsoft's back-end services. We can expect to see hosted email aggregation as well as hosted messaging aggregation and email push solutions, all coming from rebranded Danger servers and sold to consumers.

Some form of network backup - perhaps integrated with Microsoft Spaces - would seem likely too, offering simple, idiot-proof services that ordinary punters can understand and use, and will (eventually) be available for any Windows Mobile device.

Meanwhile, the interface experts at Danger will find themselves creating shell interfaces for Windows Mobile devices; either working with manufacturers to customise the interface (as Sony Ericsson has done), or creating a new, pluggable, look and feel that Microsoft can supply as an option to device manufacturers who don't want to create their own consumer-friendly interface.

So Windows Mobile will become a much less visible OS, with the manufacturer (or operator) providing the on-device branding, and users able to access and use the vast majority of applications without recourse to the Start Menu.

Not to worry; there is precedent here - back in the days of Windows 3.1 a plethora of shell interfaces could make the Windows experience marginally less painful, and for a while every PC manufacturer had their own graphical layer running on top of Windows. Over time those all vanished, a process which Microsoft no doubt eventually hopes to see repeated on Windows Mobile.

As for the Java-based Danger OS and the Sidekick devices, they are unlikely to survive assimilation and will have to find space beside the Newtons, One Per Desks, and Java Stations as good ideas that just couldn't compete

http://www.theregister.co.uk/2008/02/21/ms_danger_why/

An intriguing Apple 'What if?' scenario

In our "Macintosh Insurrection" cover story in this week's print edition, an earlier version of which was posted on our site last month, Rob Mitchell looks at why such an insurrection could happen in the enterprise, and why it probably won't. The story raises an intriguing question: If Oracle CEO Larry Ellison's bluster about acquiring Apple back in the late ‘90s had panned out, would Apple be more enterprise-friendly today?

The prospect of Ellison acquiring what was then a very sick Apple was all the buzz in early 1997. This was long before blogs became popular, but you could still weigh in on the prospect by e-mailing savapple@us.oracle.com. A lot of people dismissed the prospect as Larry being Larry, but when I spoke with Ellison in January of 1997, he insisted that a deal was closer than a lot of people realized, and that it would have happened if Jobs hadn't nixed it. Here's an excerpt from that interview:

TENNANT: Now that Apple Computer's course has pretty much been set [with Steve Jobs' return to Apple the previous month], what's the story behind the story? How serious were you about going after Apple in [former Apple CEO] Michael Spindler's final days?

ELLISON: Very serious. In fact we even lined up the money. But that was not Oracle buying Apple, that was Steve Jobs and me buying Apple. We had lined up the money, and Steve decided in the end that he didn't want to do it. I've always viewed Apple as Steve's company. He's my best friend, and my friendship with him is very important. We decided not to go ahead. It was his choice.

TENNANT: What did Jobs say to you when he was approached by Apple to come back and bring NeXT Software with him?

ELLISON: He thought the NeXT technology would help Apple enormously, and we still believe that. I believe the NeXT technology will help, but what will help even more is if Apple listens to Steve very carefully.

TENNANT: What's Steve saying to them?

ELLISON: I'm not sure I can disclose all of that. I'm not sure I know all of that. Steve thinks a number of things have to be changed at Apple -- major things -- and I really don't want to go into it. [Apple CEO] Gil [Amelio] may do it and Gil may not do it. We just don't know.

In any case, suppose the team of Ellison and Jobs had acquired Apple. Wouldn't Ellison likely have done everything in his power to leverage his investment in Apple to boost his standing in the enterprise? Wouldn't Apple have a much more formidable presence in the enterprise today?

http://blogs.computerworld.com/apple_what_if

Yahoo Puts the Buzz in Social News

Yahoo has finally launched its long-rumored Buzz portal, a social news site where you can vote stories up or down, with the chance to send the day's most popular stories to a featured spot on the Yahoo homepage.

The obvious comparison for Yahoo Buzz is the social news kings, Digg and Reddit. But, while there are some similarities, Buzz is not just a Digg clone.

Yahoo Buzz is aimed at a much more mainstream audience, one that doesn’t care about wading through tech-related minutia to find a worthwhile article to read.

Perhaps the most obvious difference is that Yahoo Buzz stories are not user-submitted, rather Buzz aggregates stories from select publishers and then users can vote them up or down. While that means Buzz will lack the variety of sources that you’ll find on Digg, it also handily eliminates a good bit of spam and the pointless link bait articles that clutter up the Digg homepage.

But the “select publishers” are not just mainstream media outlets, there’s also a good bit of content pulled from smaller sites like Make magazine and WordPress blogs. Overall Buzz strikes a good balance between the big news sites and smaller sources.

Another key difference between Digg and Buzz is that rankings on Buzz are not determined by voting alone. While voting is still the primary means of moving a story up in the rankings, Yahoo is also mining its search logs in real-time and matching the results of frequently searched terms to what’s hot on Buzz — if a story topic is frequently searched the Buzz story will get an added boost in ranking.

Buzz ends up a bit like the free for all of Digg combined with the regulated approach of Techmeme. The algorithmic addition is then combined with a human hand that will decide which of Buzz’s two or three top stories will be bumped up to Yahoo’s homepage.

Yahoo’s home page has been experimenting with outside links for a while now (Wired being one of the sources) and publishers will be happy to know that a Yahoo homepage listing generates a lot of traffic — 2 million hits in two hours in the case of one Wired story.

Of course that creates a problem for smaller sites that would buckle under the traffic — if you think the “Digg effect” is bad, wait until Yahoo effect happens. To offset any potential Yahoo effect, the company says that smaller sites will only be linked less frequently.

The design of Buzz is very similar to Digg and other social news sites, but significantly less cluttered. The only real issue is the annoying Flash menu that loads at the top of the main story page and must reload every time you click through to the next page — fire up your Flash Block extension to solve that problem.

Like Digg, Buzz is divided into news categories — world news, sports, business, entertainment, travel and more. There are also dedicated sections for image and video links. Perhaps the most telling aspect of Buzz's design is that the Tech/Sci category — a Digg staple — is buried near the bottom the of the “more” drop down menu.

Yahoo isn’t the first mainstream site to try out social news, AOL has its own effort, currently know as Propeller, but so far it hasn’t achieved anything near the success of Digg.

However, Yahoo has an advantage over both Propeller and Digg — its massive user base. And for the mainstream audience Yahoo is after, Buzz has the essential ingredients for success. Whether or not the Yahoo Buzz will draw that audience in remains to be seen.

http://blog.wired.com/monkeybites/2008/02/yahoo-puts-the.html

Happy 53rd birthday to the Jerk!

Constant readers may not believe their eyes, but yes, Happy Birthday to the Jobs! Belated, that is. Yesterday was Apple CEO and co-founder Steve Jobs' 53rd birthday. Jobs was born on February 24, 1955.

Steve Jobs was a college dropout when he teamed up with Steve Wozniak in 1976 to sell personal computers assembled in Jobs' garage. That was the beginning of Apple Computer, which revolutionized the computing industry and made Jobs a multimillionaire before he was 30 years old. He was forced out of the company in 1985 and started the NeXT Corporation, but returned to his old company in 1996 when Apple bought NeXT. Jobs soon became Apple's chief executive officer and sparked a resurgence in the company with products like the colorful iMac computer and the iPod music player. Jobs was also the CEO of Pixar, the animation company responsible for movies like Toy Story and Monsters, Inc. Pixar was purchased by the Walt Disney Company in 2006 for $7.4 billion in stock; the deal made Jobs the largest individual shareholder of Disney stock.

Some sources list Los Altos, California as Jobs's place of birth. However, in a 1995 oral history interview with The Smithsonian, Jobs said, "I was born in San Francisco, California, USA, planet Earth, February 24, 1955." Jobs was given up for adoption after birth and raised by his adoptive parents in Silicon Valley... His biological sister is novelist Mona Simpson, author of "Anywhere But Here."

http://macdailynews.com/index.php/weblog/comments/16490/

Google mounts Chewbacca defense in EU privacy debate

As the European Union questions whether IP addresses should be considered "personal data" - "personally identifiable information" in American parlance - Google software engineer Alma Whitten brings up the issue and then spends several paragraphs failing to address it.
With her blog post, Whitten points our that "the IP addresses that people use can change frequently":

For instance, your Internet service provider (ISP) may have a block of 20,000 IP addresses and 40,000 customers. Since not everyone is connected at the same time, the ISP assigns a different IP address to each computer that connects, and reassigns it when they disconnect (the actual system is a bit more complex, but this is representative of how it works). Most ISPs and businesses use a variation of this "dynamic" type of assigning IP addresses, for the simple reason that it allows them to optimize their resources.

Because of this, the IP address assigned to your computer one day may get assigned to several other computers before a week has passed. If you, like me, have a laptop that you use at work, at home, and at your corner café, you are changing IP addresses constantly. And if you share your computer or even just your connection to your ISP with your family, then multiple people are sharing one IP address.

Yes, it's all true. Your IP address can change. And sometimes, you share an IP address with others. But the same goes for phone numbers.

Sure, you can say that sometimes IP addresses don't map back to particular individuals. But this also means that sometimes they do.

"With dynamic addressing, there are circumstances where an IP address might not be personally identifiable," Mark Rotenberg, the executive director of the Electronic Privacy Information Center (EPIC), told The Reg. "But increasingly, in a vast majority of cases, it is personally identifiable - particularly when it's linked to search queries that are date and time stamped."

Last month, Rotenberg went toe-to-toe with Google global privacy counsel Peter Fleischer in front of the EU parliament, and he's adamant that as time goes on, IP addresses will only get more personal. "This becomes an even bigger problem as we move to the IPv6 environment, which has plenty of address space to uniquely identify actual devices."

What's more, dynamic IP addressing doesn't always prevent personal identification. ISPs typically keep logs of when your address was what, and courts can subpoena this information in much the same way they can subpoena information from Google.

Of course, Alma Whitten goes on to say that Google has done a great deal to guard user privacy in recent months, including "anonymizing" its search logs. Um, last we checked, the company had agreed to anonymize its search logs once they're 18 to 24 months old, and anonymize meant "changing some of the bits" in a stored IP address, making "it less likely that the IP address can be associated with a specific computer or user."

Actually, it's still unclear if this "anonymization" is actually in effect. Back in March, Google said it would happen "within a year's time," and when we asked the company about its progress, it said: "We'll get back to you."

Whitten also claims that Google has "shortened cookie lengths". But as we've said before, this affects no one but criminals and dead people.

It's yet to been seen if the EU will officially mark IP addresses as personal data. But one thing's for sure: When it comes to privacy debates, Google knows how to spin

http://www.theregister.co.uk/2008/02/23/google_spins_ip_address_privacy/

The Jerk’s iPology Heard Round the Apple

With a simple "iPology" and a “magnanimous” rebate offer, chairman Steve Jobs turned a crisis across the entire Apple tribe into a Silver Anvil award (PR’s highest award) candidate and created a classic direct marketing case study. PT Barnum must be rolling over with envy.

From Tom Bemis’ coining MarketWatch column, “Apple introduces the iPology, Innovative marketing scheme turns complaints into publicity,“ to John Paczkowski’s “Digital Daily” vcast rant “Insincere iPology,” the tsunami of buzz circled the global Apple community (178,000 English pages: Google) faster than the sound wave from the volcanic eruption of Krakatoa, generating in excess of $10 million in free publicity for Jobs’ latest innovation.

Yes folks, “Apple Computer has developed and introduced an entirely new marketing innovation called the iPology that turns customer complaints into free publicity.” (MarketWatch). And, yes again folks, myself a double 8 gig early iPhone adopter (plus one for my son, Alex), felt the double sting of the surprise $200 price reduction, Jobs’ initial explanatory letter to the tribe did little to mollify.

"There is always someone who bought a product before a particular cutoff date and misses the new price or the new operating system or the new whatever," Jobs wrote. "This is life in the technology lane."

After only eight weeks? Please!

But bowing to intense pressure from Apple loyalists (or was it after a discussion with his PR cadre, or was it all planned well in advance?), Jobs granted a $100 reprieve to the smarting techno-horde of 750,000 iPhone owners. Sort of…since the $100 is in the form of a rebate to be spent freely only at Apple stores, which makes it one of the most ingenious traffic building techniques of recent years, and doubtless a profit center as the holiday season approaches. Indeed, I completed the online “paperwork” in but a minute or two and received my rebate e-coupon just this morning. So am I happy now?

Jobs said that while he believes Apple made the right move in lowering the price of its 8-gigabyte iPhone to $399 from $599, he acknowledged that "we need to do a better job taking care of our early iPhone customers. Our early customers trusted us, and we must live up to that trust. And we must live up to that trust with our actions in moments like these."

After all, who runs the store these days –the customers not the inmates– and in this case we see Apple using up its’ “Fool Me Once” card to cleverly build market dominance (iPhone sales shot passed 1 million in a week) worth billions. But still many Apple loyalists are left with a bitter taste by the experience, many even ranting the iPhone will be their last Apple purchase.

http://chiefmarketer.com/ipology_09182007/?cid=popular

EC on Microsoft’s Promises, Promises: Is It April Fools’ Day Already?

Color the European Commission unimpressed by Microsoft’s declaration of interoperability principles this morning. Seems the EC hasn’t forgotten that Microsoft’s made these promises before. On at least four occasions.

“The European Commission takes note of today’s announcement by Microsoft of its intention to commit to a number of principles in order to promote interoperability with some of its high-market-share software products,” the EC said in a statement. “This announcement does not relate to the question of whether or not Microsoft has been complying with EU antitrust rules in this area in the past. The commission would welcome any move toward genuine interoperability. Nonetheless, the commission notes that today’s announcement follows at least four similar statements by Microsoft in the past on the importance of interoperability.”

The European Committee for Interoperable Systems, a coalition of Microsoft rivals, was equally dubious of the announcement. Noting that Microsoft announced its last interoperability initiative in August of 2007, when it had not yet complied with the EC’s 2004 ruling requiring the disclosure of interoperability information, the ECIS said the world needs a permanent change in Microsoft’s behavior, not just another announcement. “We have heard high-profile commitments from Microsoft a half-dozen times over the past two years, but have yet to see any lasting change in Microsoft’s behavior in the marketplace,” ECIS Legal Counsel and Spokesman Thomas Vinje said in a statement.

Vinje went on to suggest that if Microsoft is truly serious about enhancing its support of industry standards, it will endorse the Open Document Format at the International Standards Organization meeting next week and stop pushing forward with its proprietary Windows-dependent standard document format.

http://digitaldaily.allthingsd.com/

Bill Gates promises to be more open

Finally! Gates has pledged to bend over and be more open. Seriously REdomnd has agreed to share information about its top products in a move toward greater interoperability.

In a move to greater interoperability, Microsoft has pledged to change the way it shares information about its products.

In a clear acknowledgment of the growing importance of open-source software Microsoft has promised to introduce a number of measures including:

- the publication of APIs for "all high-volume" products;

- sharing 30,000 pages of documentation for Windows client and server protocols that were previously available only under a trade secret license;

- indicating which of its protocols are covered by patents, and promising not to sue open-source developers for development or non-commercial distribution of implementations of these protocols;

- to create new APIs for Word, Excel and PowerPoint to enable developers to plug-in additional document formats, and set these as their default format in Office 2007.

"These steps represent an important step and significant change in how we share information about our products and technologies," said Microsoft chief executive officer Steve Ballmer in a pre-prepared statement.

"For the past 33 years, we have shared a lot of information with hundreds of thousands of partners around the world and helped build the industry, but today's announcement represents a significant expansion toward even greater transparency.

"Our goal is to promote greater interoperability, opportunity and choice for customers and developers throughout the industry by making our products more open and by sharing even more information about our technologies."

Microsoft is holding a press conference with more details on the announcement later this evening.

http://www.itpro.co.uk/wireless/news/169800/microsoft-pledges-to-be-more-open.html

Are people finally fed-up with Facebook?

Numbers of visitors drops for the first time ever

According to The Times, Facebook has suffered its first monthly drop in visitor numbers since its launch.

The website, which is the most popular social networking site in the UK, had enjoyed a 17 successive month boom. But, between December and Janaury, Facebook suffered a 5% dip in visitors - from 8.9 million to 8.5 million.

Despite this, Facebook's audience was still 712% greater in January this year than in the same month last year, and up 10% on the previous quarter.

But it seems other social networking sites are suffering too. The UK's second most popular social networking website, MySpace, also saw visitor figures drop 5%, taking it down to 5 million, while Bebo, the third largest, dropped 2% to 4.1 million, showed figures published by Nielsen Online.

Networks on Yahoo! and Google-owned sites experienced falls of 16% and 30% respectively, while Piczo has lost 56% of its audience in the past year.

"Facebook was never going to be able to carry on growing the way it has, and a lot of people - especially those who've been using it heavily - are now starting to get Facebook fatigue," Alex Burmaster, an internet analyst at Nielsen Online told The Times.

"I think when something explodes like that a lot of people check it out because they feel they should, but while getting alerts about what your friends are up to is exciting for a time, that's inevitably going to die down."

Burmaster suggested that growth on the bigger social networking websites will level out this year but the popularity of niche sites will continue to grow as their visitors are more "engaged".

He pointed to WAYN (Where Are You Now), a travel networking site whose UK audience has grown 25% in the past year to 461,000, as well as LinkedIn, the professional network, which jumped from 161,000 to 433,000.

http://www.pocket-lint.co.uk/news/news.phtml/12977/14001/Is-Facebook-
facing-fizzle-out.phtml

Faster….Harder….Faster:.. Oh my God, Oh my God! Quick, Restart! Restart!

What happens when you get a woodie?.

“Every worker has at one point dreamt of controlling their computer with their thoughts. Soon you’ll be able to. A company called Emotiv has developed a headset that can transmit more than 30 expressions, emotions and actions to a computer, the BBC reports. And it’s surprisingly practical: It costs only $299 and doesn’t require a team of engineers to fine tune. Emotiv is already working with IBM to figure out how to use the technology in businesses, according to the Journal. A suggestion: blogging software that reads minds.”

http://blogs.wsj.com/biztech/2008/02/20/lindsay-lohan-pics-brain-computers-tech
-spending-blues/?mod=googlenews_wsj

Poor Steve Jobs. A Control Freak's Nightmare

Regular WSW readers won't believe their eyes, but (gasp!) we're starting to feel sorry for the Jerkoff. For a guy who likes to control everything, he must be living a nightmare. He’s battled enemies before: incompetent managers, a CEO he hired who then led a coup against him, engineers who dared to disagree with his brilliance. In most cases, he triumphed. Although John Scully got Apple’s board to boot him, he came back years later to turn the company around. He fired the engineers who dared to suggest a mouse should have two buttons. And after all, who can argue against the results: really, really cool devices like the iPod and the iPhone and a share price that’s still more than double what it was two years ago.

In fact, the cool factor is at the root of his loss of control. He knew his beautiful slick devices made all the other phones and music players look like bars of soap and would sell like hotcakes. And he had a lot of experience with the Macintosh. By keeping the operating system closed, he was able to control the price, keep demand high, and avoid the commoditization that sank a hundred PC clone makers.

He didn’t care that some analysts said he would have made billions more and even given Microsoft a run for world dominance if he had licensed his code to other computer makers. He didn’t really care about being number two in a market where you practically had no profit margin. And after all, there were signs that the iPod and iTunes were convincing people to switch to his more elegant, and really, really cool Macs. He just had to keep a tight grip on his code, and his deals with AT&T and the record companies.

But who would have thought that the iPhone would be so-o-o cool and in such demand that hackers would dare defy his wishes, that they would crack his elegant code so they could use the iPhone on any phone network they wished. And then there were those Chinese hackers, adding code so Chinese language software would run on their grey market iPhones. And now, that damned Norwegian hacker, DVD John, finding a way for folks to transfer their iTunes downloads to such clunkers like Nokia’s N series and that really ugly Palm Treo. And it might even be legal.

Poor Steve Jobs; he’s got to be going nuts here. It’s like trying to hold water with your bare hands. There are leaks all over the place – and not the kind you can trace. And this happening a guy who liked to tell Fortune magazine what photographer they should use for their annual cover suck-up about him.

There’s got to be someone he can fire. It’s that damn Internet. Word on a hack gets around even faster than he can slap a lawsuit on somebody. And those hackers are everywhere, not just within the reach of the U.S. courts. Beijing, Shanghai, Oslo? What’s a control freak to do? Maybe he’ll call Al Gore. Didn’t he start all this?

http://www.redherring.com/Home/23783

After Cellphone Companies Slash Rates….Mobile price war?

Cheaper, all-you-can-talk cellphone service is good news for consumers. But will a price war burn wireless carriers?

Yesterday, Verizon Wireless, AT&T, and T-Mobile -- three of the top four U.S. wireless carriers -- slashed prices on their high-end calling plans. Each carrier will now sell unlimited calling for $99 per month, replacing plans that sold as high as $199 per month.

These cuts alone are no big whoop -- Credit Suisse analyst Christopher Larsen estimates that "well under" 5% of subscribers pay more than $100 per month. But what if the cuts are just opening salvos in a pricing war? Some suggest, for example, that troubled Sprint Nextel will be even more aggressive, offering unlimited service for as little as $60 per month.

That scenario, coupled with a sucky outlook for the U.S. economy, prompted Larsen to downgrade the telecom sector from "overweight" to "marketweight" today. He also slashed EPS estimates. Not only would a price war lower margins, but AT&T and Verizon could see a double whammy if the cut-rate pricing convinces more home phone subs to finally drop their land lines. Specific cuts:

* Sprint Nextel 2008 EPS reduced from 52 cents to 49 cents, 2009 EPS reduced from 46 cents to 31 cents

* AT&T 2008 EPS reduced from $3.08 to $3.03, 2009 EPS reduced from $3.51 to $3.44

* Verizon 2008 EPS reduced from $2.66 to $2.55, 2009 EPS reduced from $3.09 to $2.92.

http://www.alleyinsider.com/2008/2/after_cellphone_companies
_cut_rates_wall_street_cuts_ratings

Gates: Microsoft targets Web with Yahoo or alone

Microsoft Corp plans to invest heavily in Web search to compete against Google Inc, even if it fails to acquire Yahoo Inc, the company's chairman Bill Gates said on Monday.

Gates, who called Microsoft's offer for Yahoo "very fair", said Google is the only company with "critical mass" in Web search. Microsoft needs a bigger piece of the market to create a more competitive and profitable Web search business.

"We can afford to make big investments in the engineering and marketing that needs to get done. We will do that with or without Yahoo," said Gates in an interview with Reuters.

"But we also see that we'd get there faster if the great engineering work that Yahoo has done and the great engineers there were part of the common effort," said Gates, who is Microsoft's biggest shareholder.

The two companies are at a stand-off in Microsoft's $41.7 billion unsolicited bid to acquire Yahoo. Microsoft has offered to buy Yahoo for $31 a share in cash and stock, a bid which Yahoo's board rejected, saying it undervalued the company.

Microsoft countered by saying its offer was "full and fair," but did not say what it planned to do next. Analysts expect Microsoft to sweeten its bid, possibly to $35 a share, to clinch a deal.

"There is nothing new in terms of the process. We've sent our letter and we've reinforced that we consider that it's a very fair offer," said Gates, who remains the public face of Microsoft, even though he plans to switch to a part-time role at the company in June to focus on his philanthropic work.

Microsoft's stock has fallen 13 percent since its offer for Yahoo, reducing Microsoft's offer price to $29. Yahoo shares closed at $29.66 on the Nasdaq on Friday, indicating that investors expect Microsoft to raise its bid.

http://uk.reuters.com/article/technology-media-telco-SP/idUKN1819990520080219

FBI screwed up, spied on entire email network

The FBI on Friday revealed that human error led to surveillance of an entire email network back in 2006, rather than the single email address approved by the secretive court which approves domestic wiretaps and other forms of e-surveillance.

Although the alleged mistake came to light in an Electronic Frontier Foundation (EFF) Freedom of Information Act (FIA) lawsuit, the internet service provider involved remains unpublished, due to the classified nature of the work involved.

Back doors were built into the nation's telecommunications infrastructure back in the mid-nineties which allow for almost immediate real-time surveillance of phone conversations - cellular or otherwise - emails, and other forms of electronic communications that pass through the networks of the telecommunications industry.

The ISP involved allegedly misinterpreted a warrant for one email address to be a warrant for - ahem - the entire network. This kind of mass negligence is really only the flip-side of a surveillance system that allows for almost immediate mass surveillance by the government and its cronies in the telecommunications industry.

This latest controversy comes as President Bush continues to demand that Congress provide retroactive immunity for telecommunications companies involved with illegal warrantless wiretapping of American citizens, and is sure to fan the flames of that ongoing debate. The simplistic fear-mongering that has characterized the political animus of the present administration is even less persuasive when measured against this level of incompetence - after all, what good does Orwellian spying do if those involved are too incompetent to get it right anyway?

One intelligence official shrugged it off. "It's inevitable that these things will happen. It's not weekly, but it's common." This is the most egregious case yet revealed of what is known as "overproduction" - spook-speak for when a third party, for some reason, gives more information than requested.

At least they got a warrant for this kerfuffle. The controversial warrantless wiretapping program, which has led to gridlock in Congress for the revised Foreign Intelligence Surveillance Act (FISA) - the administration has promised to veto it if retroactive immunity for telecommunications companies is not included, while simultaneously claiming that the act needs to be passed immediately in the interests of national security - has had its own suspect "glitches". No one really knows how many purely domestic communications were hoovered up by the National Security Agency under the warrantless wiretapping program, and we probably never will.

Cynics suspect retroactive immunity to be a preemptive strike, should other, more secret, surveillance programs see the light of day. The FISA court issued a rare rebuke to the FBI last year for submitting false affidavits in support of its warrant applications, and other violations of note include dragging out surveillance long past what has been approved or seeking information beyond what had been authorized. Inasmuch as the FISA court issues warrants retroactively - and, anyway, almost never denies an FBI surveillance request - one wonders how, or why, they continue to screw things up.

http://www.theregister.co.uk/2008/02/18/fbi_email_surveillance/

BOARD BUCKS YANG

While Yahoo! chief Jerry Yang desperately seeks an alternative to Microsoft's $44.6 billion hostile takeover, an independent group of Yahoo!'s board members are taking the lead in shaping the company's future.

The informal group is being led by Yahoo! Chairman Roy Bostock and includes other board members and billionaire Ron Burkle.

The friction on the board centers on Yang and his board loyalists, who are so opposed to Microsoft's offer that the independent committee is worried that the Yang group might act out of emotion rather than their fiduciary duty, thereby exposing the board to shareholder lawsuits.

According to one source close to the situation, "The emotional part of Yang would rather do anything but sell to Microsoft, but he doesn't have the cards to come up with a value-creating, competitive alternative for shareholders."

"While Yahoo!'s board has a fiduciary duty to maximize shareholder returns, running the risk of derailing a deal is dangerous to Yahoo! shareholders," said Jefferies analyst Youssef Squali.

"We believe Yahoo! would have to show substantial re-acceleration in revenue growth and margin expansion for the stock to be back substantially above $30 - something that requires a leap of faith today - if it were to stay independent," he said.

One source who does business with Yahoo! and maintains close ties to its executives said that board members Eric Hippeau, of Softbank, and Robert Kotick, CEO of Activision, have been marginalized along with Yang.

That's because Hippeau, with 12 years on Yahoo!'s board, and Kotick, who's in his fifth year of service, are seen as much more pro-Yahoo! than the others, and have typically aligned themselves with Yang on board issues.

"They're just as emotional as Jerry and as biased against selling to Microsoft as he is," this source said of Hippeau and Kotick.

Yang pleaded his case in a letter to shareholders Wednesday night, reiterating that Microsoft's bid substantially undervalues the company.

http://www.nypost.com/seven/02152008/business/board_bucks_yang_97797.htm

Microsoft Shuffles Several Execs: Girding up for Yahoo?

Microsoft announced a sweeping shake-up of its executive ranks Thursday, placing new executives over operations facing fierce new competition from Google, Apple and cellphone makers.

Full coverage of Microsoft's offer to buy Yahoo, who is advising, who else might be in play and where the bid goes from here.

The announcements were part of a broad management reorganization involving seven new senior vice presidents and seven new corporate vice presidents.

One of the more significant leadership changes was in the cellphone operations. Andy Lees was named senior vice president for mobile communications operations. Mr. Lees, who had overseen the server business, succeeds Pieter Knook, who, the company said, “made the decision to leave Microsoft to pursue other opportunities.”

Microsoft has been paying more attention to its cellphone business following the introduction of Apple’s iPhone and Google’s Android software operating system. In only a few months of the iPhone’s release, according to Canalys, a market research firm, Apple gained 28 percent of the smartphone market in the United States, a greater share of the market than the cellphones using Microsoft’s Windows Mobile software. Research In Motion, maker of the BlackBerry, leads the category that has been dominated by phones made for business users.

Microsoft is showing more interest in the consumer market. This week it announced it was buying Danger, the maker of the popular Sidekick cellphone.

Analysts said that Microsoft was moving to confront a growing competitive threat from a range of companies that have positioned themselves to offer Web-based alternatives to Microsoft’s core office-productivity applications. The other major change was the replacement of Steve Berkowitz, the current senior vice president of Microsoft’s Online Services group. Mr. Berkowitz, the former chief executive of the online site Ask Jeeves, was hired with great fanfare in April 2006 to help revive Microsoft’s search and portal operations. Microsoft has been unable to make a dent in Google’s growing dominance in search and search advertising. Mr. Berkowitz will leave the company this August, the company said.

Responsibility for online operation was split among three executives who will work in the combined organization that handles both Internet activities and the Windows operating system, which is run by Kevin Johnson.

Satya Nadella, will be the senior vice president for the search, portals and advertising group. Mr. Nadella is on the engineering side of Microsoft, and will look after the technical side of Web search, advertising systems and related systems. He will also have responsibility for the programming of the MSN portal.

Bill Veghte, will be the senior vice president for online services and Windows, handling sales, marketing and product management both for Windows and online operations.

Brian McAndrews, the senior vice president of the advertiser and publisher solutions group, will look after the strategy and marketing of Microsoft’s online activities jointly with Mr. Veghte and Mr. Nadella.

http://www.nytimes.com/2008/02/15/technology/15soft.html?_r=
1&ref=technology&oref=slogin

Little Wiggle Room for Yahoo

Since Redmond first made public its buyout offer on Feb. 1, Yahoo has held talks with several potential partners, including Google, the News Corporation and Time Warner’s AOL unit, about an alternate deal that would keep Yahoo out of the hands of the software giant.

While some of those conversations continue, no deal has emerged and a growing chorus of analysts and investors say it is improbable that anyone will come up with an offer that is more attractive to Yahoo shareholders than Microsoft’s, which was originally valued at $31 a share.

“It seems like Yahoo’s strategic options are relatively limited,” said Mark Mahaney, an analyst with Citigroup. “It is hard to see a scenario that could create as much value for shareholders as quickly as a Microsoft offer.”

The latest to have intensified talks with Yahoo is the News Corporation, but participants on both sides describe the discussions as “a long shot.”

The talks center on merging some of Fox’s interactive assets — led by MySpace — with Yahoo. The News Corporation would emerge as a major shareholder of Yahoo. It is engaged in the talks partly because, as one participant said, “there’s nothing to lose.”

The News Corporation had sought a similar combination of MySpace and Yahoo last year, people involved in the talks said, but Yahoo rebuffed the overture before a formal bid was ever made.

At the time, the News Corporation had teamed with Providence Equity Partners, a private equity firm that focuses on media. The latest round of discussions is unlikely to include Providence, these people said, though it remains a possibility.

Yahoo and the News Corporation both declined to comment.

The talks with the News Corporation follow a show of interest from Google, whose chief executive, Eric E. Schmidt, called his counterpart at Yahoo, Jerry Yang, to offer his company’s help in keeping Yahoo independent after Microsoft’s bid. The two companies discussed the possibility of Yahoo’s outsourcing its search-related ad business to Google, according to people briefed on the talks.

Many analysts believe that such a deal would generate more revenue for Yahoo because Google’s advertising technology generates more cash for every search query, on average, than Yahoo’s own technology. It would also produce substantial savings, as Yahoo could scrap its sizable engineering dedicated to search advertising.

This option had long been recommended by some Yahoo investors and analysts, but Yahoo executives had rejected it. They began considering it anew as a way to remain independent after Microsoft’s bid. But while talks between the two companies are not dead, many analysts and some Yahoo shareholders said that a deal was unlikely, in part because of antitrust concerns.

Meanwhile, two Time Warner executives confirmed that Yahoo has also proposed some sort of combination of Yahoo and AOL, but said that Jeffrey L. Bewkes, Time Warner’s new chief executive, is not likely to agree to such a deal. After the disastrous AOL-Time Warner merger, Mr. Bewkes is wary of big deals with Internet companies, one of the executives said.

http://www.nytimes.com/2008/02/14/technology/14yahoo.html?_r=1&ref=
technology&oref=slogin

News Corp. Enters Yahoo Fray

News Corp. and Yahoo Inc. are in discussions about combining MySpace and other News Corp.-owned online properties with Yahoo, according to people familiar with the matter.

The discussions are aimed at helping Yahoo fend off Microsoft Corp's unsolicited takeover offer, which was initially valued at $44.6 billion. Under the deal being discussed, News Corp. would get a stake in Yahoo which could be more than 20%.

The deal under discussion, which would also include a contribution of cash from News Corp., is a variation of one that has been considered by the two companies several times over the past 18 months. But discussions have previously fallen apart amid disagreements over MySpace's valuation, which affects the size of the stake News Corp. would get in Yahoo. News Corp., which owns Dow Jones, publisher of The Wall Street Journal, is likely to push for MySpace to be valued at between $6 billion and $10 billion, according to people familiar with the matter. Reports of the talks have appeared on Web sites including TechCrunch and Silicon Alley Insider in the past couple of days.

The deal would allow Yahoo to remain independent while giving News Corp. substantial control over a huge array of Internet properties and advertising opportunities. In addition to MySpace, News Corp. owns the videogame site IGN, movie-review aggregator Rotten Tomatoes, and other Web sites. WSJ.com and FoxNews.com would not be part of the online combination under discussion.

http://online.wsj.com/article/SB120293230377566103.html

Illegal downloaders face net ban

UK considering cutting access to pirates

Surfers illegally downloading copyrighted material from the internet will have their connections cut under new legislative proposals being drafted by the UK government.

The proposed Green Paper, which the Government is due to unveil next week, will require ISPs to take action against the estimated six million users a year who access pirated material.

The law is expected to propose a 'three-strike' system, similar to that already in place in the US and France.

Users suspected of illegally downloading content will first receive a warning email from their service provider.

Should they continue to download copyrighted content, they will receive a suspension from the service and any if caught a third time, they will have their internet access completely cut off.

It is unclear whether those customers who have running contracts with their service provider will have to continue to pay for the service or if the contract will be terminated early.

There is also no word on if these banned users will be blacklisted by other ISPs, or if they could simply sign up to another service provider.

A spokeswoman for the Department for Culture, Media and Sport said: "Early drafts of our creative economy programme document were circulated to stakeholders for comment.

"The content and proposals for the strategy have been significantly developed since then and a comprehensive plan to bolster the UK's creative industries will be published shortly. We will not comment on the content of the leaked document. "

Although the full details are not yet available, the news is already causing consternation among privacy advocacy groups.

It has also raised concerns about how the law could be effectively implemented, particularly in light of the growing use of mobile internet technologies such as WiMax and 3G data services.

http://www.vnunet.com/vnunet/news/2209477/illegal-downloaders-face-net-ban

Amazon pooh-poohs (ingenious) New York net tax plan

More than happy to let the people of New York avoid paying vast amounts of internet sales tax, Amazon.com has spoken out against a new net tax plan from Governor Eliot Spitzer.

Back in November, The New York Sun leaked word that Spitzer was poised to roll out a clever new policy that would force big name e-tailers like Amazon to collect sales tax on all items purchased from his great state.

Spitzer bagged the plan that same day, his office saying that the pre-Christmas season was "not the right time to be increasing sales taxes on New Yorkers." But in late January, the plan resurfaced as part of his proposed state budget, and it's now awaiting approval from legislators.

Using an untried legal argument, Spitzer's plan would force uber online retailers like Amazon to collect an estimated $47m in New York sales tax during the coming fiscal year - then another $73m the following year. And Amazon doesn't like that.

Though he couldn't fit in an interview with The Reg until tomorrow, Amazon vice president of global public policy Paul Misener told The AP that Spitzer's proposal "would be a radical departure from anything currently being done in the U.S."

This is certainly true. But a radical departure isn't necessarily a bad thing.

Today, in accordance with a 1992 Supreme Court case involving an old-school mail order business, e-tailers are required to collect sales tax if they have a "physical presence" in the state where a customer resides. Otherwise, the onus is on the customer to declare the purchase on their next tax return. They call it "use tax."

Of course, not every American, um, remembers to pay their use tax. Indeed, some tax forms still fail to include a line item for such things.

At the moment, Amazon does not collect sales tax from New Yorkers. It doesn't have a warehouse or an office or any other corporate facility in the state. But Spitzer is arguing that lawmakers are ignoring another portion of the company's physical presence: Members of the Amazon affiliate marketing program. You know, independent web sites that drive traffic to Amazon.com in exchange for a cut of the profits.

http://www.channelregister.co.uk/2008/02/13/amazon_badmouths_new_york_
net_tax_plan/

Gird your loins: Internet users could be banned over illegal downloads

You'd better look to those crusty old gonads of yours. People who score, and illegally download films and music will be cut off from the internet under new legislative proposals to be unveiled next week. Internet service providers (ISPs) will be legally required to take action against users who access pirated material, The Times has learnt.

Users suspected of wrongly downloading films or music will receive a warning e-mail for the first offence, a suspension for the second infringement and the termination of their internet contract if caught a third time, under the most likely option to emerge from discussions about the new law.

Broadband companies who fail to enforce the “three-strikes” regime would be prosecuted and suspected customers’ details could be made available to the courts. The Government has yet to decide if information on offenders should be shared between ISPs.

Microsoft and Sony Ericsson's smartphone. Sony Ericsson's flagship phone for 2008 will run on Windows, the first time the two companies have partnered in a mobile device.

Six million broadband users are estimated to download files illegally every year in this country in a practice that music and film companies claim is costing them billions of pounds in lost revenue annually.

Britain’s four biggest internet providers – BT, Tiscali, Orange and Virgin Media – have been in talks with Hollywood’s biggest studio and distribution companies for six months over a voluntary scheme. Parallel negotiations between Britain’s music industry and individual internet providers have been dragging on for two years.

Major sticking points include who will arbitrate disputed allegations, for example when customers claim to have been the victim of “wi-fi piggybacking”, in which users link up to a paid-for wireless network that is not their own. Another outstanding disagreement is how many enforcements the internet companies will be expected to initiate and how quickly warning e-mails would be sent.

International action in the US and France, which is implementing its own “three-strikes” regime, has increased the pressure on British internet companies and stiff.

http://technology.timesonline.co.uk/tol/news/tech_and_web/the_web/article3353387.ece

YAHOO! HOO-HA! SHAREHOLDERS, BALLMER POUR ON THE PRESSURE

The Microsoft-Yahoo! takeover battle is about to get ugly - and how ugly will depend on whether the CEOs of both companies behave rationally or emotionally.

Microsoft CEO Steve Ballmer fired back at Yahoo!'s board yesterday for not "embracing" his $44.6 billion offer and reiterated his intention to "pursue all necessary steps to ensure that Yahoo!'s shareholders are provided with the opportunity to realize the value inherent in our proposal."

Sources said that Microsoft has hired proxy solicitation firm Innisfree in anticipation of a proxy battle to replace Yahoo!'s board.

Representatives of Innisfree were calling Yahoo! shareholders yesterday to gauge their feelings on a deal, sources said.

While Ballmer hopes to avoid a nasty proxy fight, he is prepared to go forward if Yahoo! continues rebuffing his offer, sources said. He has until March 13 to nominate directors to Yahoo!'s board.

Microsoft's original cash-and-stock bid now stands at $28.91 as the software giant's stock has fallen over 12 percent since the unsolicited offer was made public.

Yahoo! rose 67 cents to close at $29.87 as investors bet Ballmer will raise his offer. Microsoft shares fell 35 cents to $28.21.

Yahoo! wants $40 a share - a price sources close to Microsoft call "absurdly high." One source said that there's a limit to how high Ballmer is willing to go to complete the deal on friendly terms and $40 is way past it. Meanwhile, some of Yahoo!'s biggest investors seem to be stacking up against Yahoo! CEO Jerry Yang's refusal to sell the company.

Mutual fund giant T. Rowe Price, which owns 18 million shares of Yahoo! said yesterday that it would be "very vocal" if Microsoft raises its offer and Yahoo! rejects it again.

Capital Research and Management, Yahoo!'s largest investor with a recently raised stake of 11.6 percent, is said to favor a deal as well. But like many other big holders of Yahoo! stock, CapRe also owns a giant chunk of Microsoft worth about $15.7 billion and does not want to see Ballmer overpay for Yahoo!

Investors that own roughly 30 percent of Yahoo! shares - including Barclays, Vanguard and State Street - hold a combined stake in Microsoft worth a whopping $58 billion.

http://www.nypost.com/seven/02122008/business/yahoo__hoo_ha_97271.htm

MWC 2008: Motorola: Underwhelms

Oh dear oh dear, things aren't getting any better for Motorola at the Mobile World Congress are they...

Sales down 38 per cent, market position falling, CEO resigning, new CEO babysitting the handset division - solution: a super showing at MWC; reality: small selection of pants.

Tittering somewhere between complete disaster and practical joke, what Motorola has unveiled this week is beyond troubling. It'll keep it brief, because - well, nothing here is worth a considerable amount of text.
The dubious highlight of the announcements is the 'Z6w' slider, a quad band (no 3G) handset based on the Z6 announced in May which does nothing more than thrown WiFi into this old model. Everything else, the 2MP camera, the Bluetooth 2.0 with A2DP, the small 2in QVGA display, the miniscule 64MB of onboard memory and microSD expansion slot are all unaltered. You read that right, this is the highlight.

Not strictly a mobile phone, but appearing at MWC nevertheless because it's other handsets - the E8 and Z10 - were previously announced, is the 'DH01n'. This is an upgrade to the DH01 which adds a GPS receiver into the DVB-H mobile TV device and like its predecessor has a 4.3in widescreen display, support for video playback at up to 25fps and the ability to record TV or play directly from SD cards. No details on size, weight or price were released and this seems extremely niche.

Capitulating this farce are the 'W181' and 'W161' two ultra-low end dual band candybars, both with small, square 128 x 128 pixels screens, the former in colour, the latter in monochrome (really!). Each sports an FM radio, no camera and, well... that's it. They'll arrive sometime in Q1 - wait with baited breath.

In sum, I'm tempted to see this as the clearest proof yet that Motorola isn't interested in holding onto its handset division...

http://www.trustedreviews.com/mobile-phones/news/2008/02/12/
MWC-2008-Motorola-Underwhelms/p1

Is The Jerk going into the game consol biz?

There's not really much more to this story than the headline tells, but nonetheless, if the grapevine is to be believed, then Apple's latest trademark filing could well be the indicator that it intends to break into the games console domain. Of course these rumours have surfaced before, to no avail, but that doesn't mean we're not intrigued by what might be produced.

The change to the trademark itself is fairly vague and broad-based, covering the use of the brand Apple in relation to "toys, games and playthings, namely, hand-held units for playing electronic games; hand-held units for playing video games; stand alone video game machines; electronic games other than those adapted for use with television receivers only; LCD game machines; electronic educational game machines; toys, namely battery-powered computer games."

Clearly from such an ambiguous filing there's no way to tell what kind of device, if any, Apple might be planning. Given the iron grip held by the Nintendo's DS over the portable games console market it does seem a little odd to suggest Apple might be aiming to enter the arena. Then again, the company does have a proven track record of creating innovative and highly desirable products.

In all honesty I expect this will turn out just to be a case of Apple wanting to ensure that if it ever did want to produce a gaming device it would be able to, as well as ensuring no other company can use its brand in such a fashion. You can color me surprised if this one comes to fruition.

http://www.trustedreviews.com/apple/news/2008/02/11/Apple-Readying-Games-Console/p1

Yahoo!'s Unlikely Candidate For Sugar Daddy

Yahoo! needs a sugar daddy--could it be tired old AOL?

This weekend, word leaked that Yahoo! was planning to send Microsoft a "Dear John" letter on Monday formally rejecting the software giant's offer of $31 a share as too cheap.

CE Jerry Yang wants to keep Yahoo! independent and has spurned approaches in the past. But Yahoo! is in play now and clearly needs a partner. According to The Times newspaper of London, Yahoo! is exploring a deal with AOL, the beleaguered Internet division of Time Warner.

Perhaps it's a strategy aimed simply at driving up readership on Yahoo!'s news channels. Yahoo!'s twists and turns are becoming the financial version of a soap opera.

Last week, Time Warner's new chief executive, Jeffrey L. Bewkes, said he planned to split off AOL's Internet access operations from its Web site and online advertising business. The Internet access business is profitable--but shrinking. Overall, operating income for AOL for the past quarter (excluding one-time events) was essentially flat. That would hardly suggest that AOL's Web business is a money machine.

Although both Yahoo! and AOL command healthy Web traffic, both have had a hard time turning those eyeballs into profits. Combining any portion of AOL with Yahoo! might be a great deal for Time Warner, but it's hard to see how it helps Yahoo!

Pundits may spin out stories of how the two will together have a hefty chunk of e-mail and Internet messaging, but neither of those businesses pulls in anything like the riches of search advertising.

Meanwhile, in Silicon Valley, the first wave of Yahoo! employees will get pink slips this week. Those job cuts--about 1,000 in all--were first mentioned when Yang released the company's fourth-quarter results in late January and predicted slower growth ahead. More layoffs are likely in the future, particularly if Yahoo! continues to flirt with alliances with businesses that have had an even tougher time making ends meet than it has.

A Yahoo-AOL alliance makes sense for only one organization: Google (nasdaq: GOOG - news - people ). It leaves Google free to dominate keyword search, with only a few stray ghosts of competitors to keep away the anti-trust regulators. It won't matter whether Google's search engine is significantly better than competitors. Advertisers will continue to flock to it because of its towering presence.

Right now, casual searchers won't see tremendous differences in the results offered by Google, Yahoo! and Microsoft's search engines. For instance, plug "ski in Tahoe" into those three search engines and the results are mighty similar. The first result to pop up at the top for all three is identical: "skilaketahoe.com." Of the 10 search results offered by each site, seven to eight of those listings show up on at least two of the other search sites. Google could boast three "unique" results, but two are for specific resorts. Both Microsoft and Yahoo! dug up unique directories of Tahoe skiing linked to a wide array of services.

Google did a fine job of pulling up relevant ads: it lists eight ads for travel agencies and booking services to help you go skiing. Microsoft's search results include a handy snow report--but among its eight ads is one for a Chevy Tahoe truck (no thanks) and a generic ad for Yahoo! Travel. Yahoo! should take the prize for putting up the most ads: it offered a full, relevant dozen.

But who's to know? In December, Google carried out 66% of U.S.-based Internet searches; Yahoo captured 21% and Microsoft did a bit more than 5%, according to market analysis firm Hitwise. (See: " Climbing The Ad Web Landscape") Familiarity breeds steady habits: Why, with results that are so similar, would anyone switch to a different search engine?

Microsoft CEO Steve Ballmer said as much to The Wall Street Journal.

"The reason why Google is a market leader is not because they have [more] products," Ballmer said. "They're the leader because they're the leader in one product area, called search."

http://www.forbes.com/technology/2008/02/11/yahoo-aol-microsoft-tech-cx_ec_0211techyahoo.html